China’s reliance on coal for electricity remains significant, even as the share of coal has decreased in recent years due to the rise of renewable energy sources. Currently, coal accounts for about 60% of the country’s electricity generation. Earlier this year, a surge in hydropower, fueled by abundant rainfall, temporarily reduced coal’s share during the summer months.
However, hydropower generation sharply declined in September, leading to increased use of thermal coal. This rise in thermal coal usage comes in response to a surge in electricity demand in the world’s second-largest economy. According to official data reported by Reuters columnist Clyde Russell, thermal power generation, primarily from coal, rose by 8.9% last month.
Overall, power generation in China increased by 6% in September compared to the same month last year. This growth reflects a trend where electricity demand is outpacing the country’s economic growth. Power demand surged by 8.5% in September compared to the previous year. Year-to-date, power consumption in China has risen by 7.9%.
The increase in power consumption has led to higher coal demand, as the energy sector continues to rely on thermal generation for a consistent electricity supply. This trend is not solely due to economic growth. China’s economy has expanded by less than 5% so far this year, raising concerns that it may miss its own growth target of “about 5%” for 2024.
The rising power demand is also linked to the growing use of household appliances as the middle class expands. Additionally, there has been a significant rise in electricity use for data centers and electric vehicle (EV) charging. The China Electricity Council reports that power consumption in the data services sector and for charging services skyrocketed in the first half of 2024.
From January to June, power consumption in data centers, big data, and cloud computing increased by 33% compared to the same period in 2023. Meanwhile, sales of electric vehicles have outpaced those of conventional cars for three consecutive months. In September, EV and plug-in hybrid sales jumped by 50.9% compared to the previous year, capturing a 52.8% share of total car sales.
By the end of 2022, China’s electricity consumption per capita exceeded that of the European Union and is expected to continue rising, according to the International Energy Agency (IEA). The IEA noted in its July report that the rapid growth of solar photovoltaic (PV) production, electric vehicles, and related materials will support ongoing electricity demand as China’s economy evolves.
Despite the growth in coal-fired power generation, China achieved a significant milestone in clean energy in the first half of the year. For the first time, the share of coal in power generation fell below 60%, thanks to increases in hydropower, solar, and wind energy. This decrease was primarily due to a rebound in hydropower generation during the late spring and summer, following heavy rains.
However, in September, hydropower generation dropped by 14.6% from the previous year, and the increase in coal power generation helped fill this gap.
Coal-fired power generation is expected to remain a crucial part of China’s electricity system for years to come. As electricity demand continues to outpace economic growth and as electrification expands with the energy transition and the growth of data centers, coal will play a key role in meeting the country’s energy needs.
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